Report: San Diego 2nd in life sciences

San Diego ranks as the second-largest life science cluster in the United States, in a new report from Jones Lang LaSalle. The region was ranked seventh last year by the commercial real estate firm.

In both years, the Boston area ranked first and the San Francisco Bay Area ranked third. Raleigh-Durham in North Carolina came in fourth, Philadelphia fifth and the Washington, D.C., region sixth. The New Jersey/New York region traded places with San Diego, dropping from second to seventh.

The report takes a broad view of life sciences, including medical device and large pharmaceutical companies along with biotechnology. Other surveys, which focus more on biotech, often place the San Francisco and the Boston areas ahead of San Diego.

Rankings with last year aren't comparable, because the report's methodology has been changed. For the first time, the report measures the percentage of life science facilities, including branch offices, compared with the total number of facilities in the market.

The report continues to measure the density of life science employment, along with the amount of life science funding from the National Institutes of Health and the venture capital industry.

Dropped this year were categories regarding the percentage of science and engineering graduate students, research and development spending, and the total square footage of academic and research institute centers.

These changes makes the report more valid, said Erin Bovee, a researcher with the company. Counting life science locations helps to measure the density of innovation in a region, she said.

"Last year, we felt San Diego was lower than it should have been because we weren't taking into account the number of facilities, because we didn't have a good picture of it," Bovee said.

"A lot of the innovation is not coming from your big pharma companies, it's coming from collaborations with academic institutions, it's coming from these incubator centers," Bovee said. "And eventually, when the product seems like it's going to be successful, they (the companies) often get acquired by one of the larger pharma companies."

San Diego contains many life science companies with just a few employees, said Grant Schoneman, a Jones Lang LaSalle life science broker in San Diego. Seventy percent of life science leasing activity in the San Diego area goes to companies with fewer than 17,000 square feet, he said.

Joe Panetta, president and CEO of the San Diego-based life science trade group Biocom, said the report shows the progress of the region in building its life science cluster.

"We're reaping the fruits of that investment in some very important areas of life science that are going to be key to the growth of the industry," Panetta said. That includes stem cell research, he said, supported both through California's $3 billion stem cell research program and local investment. Other areas include genomics and personal genetic medicine, along with basic biomedical research.

Despite the change in methology, the report's rankings reflect real developments, according to life science veteran Ed Silverman, who writes the popular industry blog Pharmalot.

Big pharmaceutical companies have cut thousands of jobs at their headquarters and research centers, which are mainly on the East Coast, said Silverman, who lives in New Jersey and visited San Diego last week.

"San Diego has not kidded itself that it's going to attract the U.S. headquarters for one of the top 15 global drugmakers," Silverman said. "San Diego plays to its strengths. It's got a growing leadership in biotech, and there's a lot more potential growth in the smaller companies."

Top 10 Life Science Clusters:

1: Greater Boston

2: San Diego

3: San Francisco Bay Area

4: Raleigh-Durham, N.C.

5: Philadelphia

6: Suburban Maryland/D.C./Arlington, Va.

7: New Jersey/New York City

8: Los Angeles/Orange County

9: Minneapolis/St. Paul

10: Seattle

Source: Jones Lang LaSalle Life Sciences Cluster Report, 2012